Moody's Investors Service
downgraded
Kellogg
Company's senior unsecured debt to
Baa2 from Aa2 in anticipation of the company's acquisition
of
Keebler
for $3.8 billion in cash, plus the assumption
of $555 million in existing Keebler debt. Kellogg is expected
to obtain permanent long-term financing for a large portion
of the acquisition financing within six months following the
transaction. Keebler's bank credit facility will be cancelled
following the acquisition, and the rating will be withdrawn.
The acquisition will nearly triple Kellogg's debt. Despite
the significant increase in debt, Moody's expects Kellogg to
continue to direct a large portion of its internal cash flow
to cash dividends as opposed to debt reduction. The rating
also reflects Kellogg's exposure to the highly competitive,
slow growth ready-to-eat cereal business. Supporting the
rating is the relatively faster-growing cookie and cracker
business to Kellogg's portfolio. Keeblers holds the number
two U.S. market share in cookies and crackers. Calls
to
Thomas
Webb, cfo for Kellogg, were
referred to a spokesman, who did not return them by press
time. Kellogg is headquartered in Battle Creek,
Mich.

*
Moody's downgrade the
ratings on
WEC
Company's $40 million secured credit
facility to B3 from Ba3 due to the company's weak overall
performance caused primarily by a significant decline in demand in
the construction segment. Meanwhile, manufacturing and labor costs
have increased. The negative outlook incorporates the likelihood of
continued weakness in construction into 2001, which could drain the
company's cash. Moody's also factors in that the company violated
bank covenant requirements (for which it obtained waivers) for two
consecutive quarters through September 2000, and will likely fail
to meet covenants for the fourth quarter ended in December.
However, the rating is supported by the new operating management,
which has considerable experience in restructuring troubled
companies. WEC, the operating subsidiary of
Wood Equipment Company,
is located in Rockford, Ill. and is a manufacturer of attachments
for a variety of mowing, cutting and clearing, and construction
applications under various brand names.

*
Edison Mission
Energy's senior unsecured debt rating was
nudged down to Baa3 from Baa1 by Moody's because of weak
performance from its investment in
Fidler's Ferry
and
Ferrybridge. The rating
also considers the potential implications to EME's balance sheet
and leverage in light of the loss of Edison International as a
source of acquisition capital support particularly if EME were to
consider any significant acquisitions. Supporting the rating is the
highly predictable nature of EME's cash flow, with approximately
65% of it coming from contracted revenues with little cash flows
coming from non-investment grade companies.